The AZEK Company: Initiation of Coverage – Is The Robust Demand in Residential Markets Likely To Last?

This is our first report on the AZEK Company, leading manufacturer of eco-friendly building products. The company reported an 11% net sales increase year-over-year in Q1 2024. Excluding the recently divested Vycom business, net sales increased 22% year-over-year, driven by the strong performance of its residential sector. The residential segment’s net sales increased by 24% and its adjusted EBITDA grew by 430% year-over-year owing to a strong gross margin performance and normalized production levels. Furthermore, the company reported that adjusted EBITDA margin expanded 16 percentage points to 23.2%.